Need for farm succession plan stressed

The erosion of ambitious young people from rural communities is compounded, at least in part, by difficulties that arise in passing on the farm to the next generation, experts say.

Candace Krebs

ATWOOD, Kan. — The erosion of ambitious young people from rural communities is compounded, at least in part, by difficulties that arise in passing on the farm to the next generation, experts say.

According to a study in Iowa, only 30 percent of family farms pass successfully to the second generation. Ninety percent of family farms won’t make it to the third generation, and 96 percent won’t make it to the fourth, according to the study.

Rural communities are feeling the impact. Raised on a farm near Goodland, Kan., Michael Irvin graduated in a class of 144 students. Now, class sizes are down to around 50.“How do we keep the brain drain from happening?” Irvin asked at a workshop in Atwood, Kan., recently. “The younger generation needs some assurances. We’d get more kids to stay, if we would just open up and talk to them about it.”

Everyone seems to have a farm succession story, and many of them are less than happy ones.

Take the case of the young whippersnapper whose early morning cattle feedings stepped on the toes of a gruff grandfather who never did feel comfortable sharing the reins. (He eventually left for an academic career, and the ranch passed out of the family.) By contrast, there’s the fourth-generation farmer who still regrets that he was forced to forego a college degree because he was urgently needed to provide labor back home.

Irvin, an attorney and director of the Kansas Farm Bureau Legal Foundation, watches, as back home on the family farm, his 85-year-old father still tells his 55-year-old brother what to do.

“My brother still wonders who is running the farm,” Irvin joked. On top of that, Irvin and a sister, the non-farming siblings, now own a greater financial stake in the operation than the brother who has spent the last 20 years farming it.

How to pass on or divide up a farm can be a huge source of conflict within families.“I want to make it a national law that families can’t farm together,” joked Linda Hessman, the wife of a Dodge City wheat farmer and a professional mediator for the Kansas Ag Mediation Services housed at K-State in Manhattan. The program can help farmers resolve family financial disputes and currently sets up about 15 mediations a year, according to Char Henton, the program’s coordinator.

A number of legal tools are also available to minimize estate taxes, probate expenses and uncertainty, including forming limited liability corporations, joint tenancy arrangements or long-term farm leases, Irvin said. But each situation is different, and it begins with making the effort to plan, talk it over and consult with experts.

Donn Teske, a former farm financial analyst who is now the president of Kansas Farmers Union, believes most farmers spend more time planning their crop rotations than they do developing their estate plans.

He’s also concerned that too many farming agreements are still based on a handshake and vague assurances of future ownership.

Instead, it’s important to formulate a plan, put it in writing and communicate it to the entire family.